The Labor Department reported on Friday morning that the economy added a solid 155,000 jobs in December, and that the unemployment rate remained unchanged at 7.8 percent — tied for its lowest level in four years. The report is the latest evidence that the labor market — after years of periodic setbacks — is now on a steady, if slow, climb out of the deep hole caused by the Great Recession.
In further good news, the Labor Department said that the economy created 161,000 jobs in November, up from its initial projection of 146,000.
In December, the private sector added 168,000 jobs, while the government — at the federal, state, and local levels — shed 13,000 workers. Construction companies added 30,000 jobs, the most since September 2011, which was partially attributed to efforts to rebuild areas in the Northeast ravaged by Hurricane Sandy.
It appears that the caustic fiscal cliff debate in Congress had a negligible impact on hiring, despite assertions that the cloud of uncertainty spewing from Washington, D.C., was causing businesses to think twice about making new labor investments. Businesses were reportedly immensely relieved that Congress found a way to extend the Bush tax cuts for all but the wealthiest Americans, as well as unemployment benefits, which act as a stimulus for economic growth.
However, concern lingers that looming budget battles in Congress could undermine the labor market's progress. In the next two months, the country faces the prospect of crippling spending cuts, a U.S. default on its debt, and a government shutdown — if Congress fails to act. "We may be seeing the calm before the storm right now," Ian Shepherdson, the head economist at Pantheon Macroeconomic Advisors, told The New York Times. "Small businesses are wringing their hands in horror at what's going on in Washington."